Nothing Ventured, Nothing Gained

Failure seems to be ever present - employers failing to retain employees, the economy failing to rebound or stabilize, car manufacturers failing to avoid bankruptcies. I can't think of anyone who enjoys failing. Yet, few seek out failure for its own sake.

This all came to light as I listened to Michael Eisner's keynote at the 2009 IASA Educational Conference and Business Show, where he addressed the necessity of taking risks - both with business processes and capital. Risk, in the insurance industry, is something insurers do a pretty good job of controlling.

So, if insurers succeed in excising all elements of risk from within their own walls, are they in turn running the risk of stifling learning and creativity? For Eisner, the answer is yes. He summed it up in his presentation, saying, "If you punish failure, you enable mediocrity."

While nobody would say that failure should be celebrated, Eisner asked the managers present if they would really punish someone for taking a calculated risk that, if successful, would have dramatically changed their business? Let's be realistic: Failures are unavoidable, and after mindless or consistent failures, you can't just sit idly by. However, Eisner argued it is the role of leadership to foster a climate where ambitious, creative employees can take calculated risks without endangering the success of the business or their careers.

It is this ability to learn from failure and apply the lessons to better the business that successful managers should stress. It seems silly to compare any of this to basketball, but Dwight Howard, center with the Orlando Magic, was quoted after his team's loss in the NBA finals. "It hurts a lot, but you can learn from losing. Sometimes you've got to lose to win," he said. "I've got a great feeling that we'll have a chance to get back. There are no doubts in my mind about that. I think it's a great stepping-stone for us."

A failure you may better relate to is Steve Jobs. After being unceremoniously ousted from Apple Inc., a company he founded, Jobs started NeXT Inc. I think it's safe to say that the NeXT computer was a commercial failure, yet the lessons Jobs learned along the way paved his way for a successful return to Apple. What's more, the "unsuccessful" software developed at NeXT now underpins Apple's very successful OSX operating system. By unduly punishing those that take calculated risks, are you punishing the next Steve Jobs?